What was the total amount spent on food and packaging for company-operated restaurants by Carl's Jr. Restaurants LLC?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| ,652) | (27,320) | — | — | (61,863) | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other income (loss), net | 3,589 | 112,499 | 61,153 | 406 | 81,860 | 36,915 | (291,632) | 4,790 | ||
| Income (loss) before income taxes | 118,236 | 66,269 | 61,153 | 82,120 | 41,798 | 36,915 | (291,632) | 114,859 | ||
| Income tax expense | 4,453 | — | — | 1,461 | — | — | — | 5,914 | ||
| Net income (loss) | $ 113,783 $ | 66,269 $ | 61,153 $ | 80,659 $ | 41,798 $ | 36,915 $ | (291,632) $ | 108,945 | ||
THE CKE SECURITIZATION ENTITIES COMBINING CONSOLIDATING STATEMENT OF OPERATIONS (In thousands)
Fiscal 2023
| Carl's Jr. Restaurants LLC | Carl's Jr. Funding LLC | Carl's Jr. SPV Guarantor LLC | Hardee's Restaurants LLC | Hardee's Funding LLC | Hardee's SPV Guarantor LLC | Eliminations | The CKE Securitization Entities | |
|---|---|---|---|---|---|---|---|---|
| Revenue: | ||||||||
| Company-operated restaurants | $ 111,433 $ | — $ | — $ | 242,820 $ | — $ | — $ | — $ | 354,253 |
| Franchised restaurants and other | 168,244 | 5,579 | — | 122,587 | 11,835 | — | (17,414) | 290,831 |
| Total revenue | 279,677 | 5,579 | — | 365,407 | 11,835 | — | (17,414) | 645,084 |
| Operating costs and expenses: | ||||||||
| Company-operated restaurants: | ||||||||
| Food and packaging | 28,226 | — | — | 70,215 | — | — | — | 98,441 |
| Payroll and other employee benefits | 32,897 | — | — | 80,466 | — | — | — | 113,363 |
| Occupancy and other | 35,240 | — | — | 82,317 | — | — | (17,414) | 100,143 |
| Total company-operated restaurants | 96,363 | — | — | 232,998 | — | — | (17,414) | 311,947 |
| Franchised restaurants and other | 66,917 | — | — | 24,089 | — | — | — | 91,006 |
| Advertising | 6,774 | — | — | 12,502 | — | — | — | 19,276 |
| General and administrative | 6,694 | 23,462 | 1 | (724) | 26,515 | — | — | 55,948 |
| Facility action charges, net | 526 | — | — | 3,063 | — | — | — | 3,589 |
| Total operating costs and expenses | 177,274 | 23,462 | 1 | 271,928 | 26,515 | — | (17,414) | 481,766 |
| Operating income (loss) | 102,403 | (17,883) | (1) | 93,479 | (14,680) | — | — | 163,318 |
| Interest expense | (1,557) | (27,649) | — | (6,021) | (27,525) | — | — | (62,752) |
| Other income (loss), net | 1,131 | 96,478 | 60,645 | 690 | 80,449 | 33,389 | (270,725) | 2,057 |
| Income (loss) before income taxes | 101,977 | 50,946 | 60,644 | 88,148 | 38,244 | 33,389 | (270,725) | 102,623 |
| Income tax expense | 3,282 | — | — | 1,544 | — | — | — | 4,826 |
| Net income (loss) | $ 98,695 $ | 50,946 $ | 60,644 $ | 86,604 $ | 38,244 $ | 33,389 $ | (270,725) $ | 97,797 |
Carl's Jr. SPY Guarantor LLC and subsidiaries, and Hardee's SPY Guarantor LLC and subsidiaries (the "CKE Securitization Entities")
Combined Consolidated Financial Statements for the fiscal years ended January 30, 2023 and January 31, 2022
(With Independent Auditors' Report Thereon)
KPMG LLP 1201 Demonbreun Street Suite 1100 Nashville, TN 37203
Independent Auditors' Report
Managing Member Carl's Jr. SPV Guarantor LLC and Hardee's SPV Guarantor LLC:
Opinion
We have audited the combined consolidated financial statements of Carl's Jr. SPV Guarantor LLC and its subsidiaries, and Hardee's SPV Guarantor LLC and its subsidiaries (the Company), which comprise the combined consolidated balance sheets as of January 30, 2023 and January 31 , 2022, and the related combined consolidated statements of income, members' deficit, and cash flows for each of the fiscal years then ended, and the related notes to the combined consolidated financial statements.
In our opinion, the accompanying combined consolidated financial statements present fairly, in all material respects , the financial position of the Company as of January 30, 2023 and January 31 , 2022, and the results of its operations and its cash flows for each of the fiscal years then ended in accordance with U.S. generally accepted accounting principles.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Combined Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities , in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 9 to the combined consolidated financial statements, in fiscal 2023, the Company adopted new accounting guidance to account for leases in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 842, Leases. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Combined Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the combined consolidated financial statements in accordance with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the combined consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the combined consolidated financial statements are available to be issued.
Auditors' Responsibilities for the Audit of the Combined Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the combined consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the combined consolidated financial statements.
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the combined consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the combined consolidated financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the combined consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings , and certain internal control related matters that we identified during the audit.
Other Information
Management is responsible for the other information included in the supplemental schedules. The other information comprises the combining consolidating balance sheets and combining consolidating statements of operations included in the supplemental schedules, but does not include the combined consolidated financial statements and our auditors' report thereon. Our opinion on the combined consolidated financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the combined consolidated financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the combined consolidated financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, Carl's Jr. Restaurants LLC spent $28,226 on food and packaging for company-operated restaurants. Hardee's Restaurants LLC, a related entity, spent $70,215 on food and packaging for its company-operated restaurants. The combined total for 'The CKE Securitization Entities' is $98,441.
In a separate statement, Carl's Jr. Restaurants LLC spent $28,645 on food and packaging, while Hardee's Restaurants LLC spent $69,234. The combined total for 'The CKE Securitization Entities' in this statement is $97,879.
Another statement shows Carl's Jr. Restaurants LLC spending $28,251 on food and packaging and Hardee's Restaurants LLC spending $72,327. The combined total for 'The CKE Securitization Entities' is $100,578.
These figures reflect the costs associated with food and packaging for company-operated restaurants under the Carl's and Hardee's brands, which are part of the broader CKE Securitization Entities. A prospective franchisee should consider these costs when evaluating the potential profitability of a Carls franchise, as food and packaging expenses are a significant component of operating costs.